June 22, 2021

7 Steps to Tacoma Mortgage Loan Refinancing

Thinking about refinancing your home in Tacoma, WA?

With interest rates at incredible lows, and years of Tacoma, Washington home prices rising fast, this is a great year to consider refinancing your mortgage loan. 

Check out these steps for a smart refinance and skillfully navigating the steps to get to a closing. 

1. Know Your Real Goals & Needs

Before diving into the process of refinancing your home it pays to consider and get clarity on what your real goals and needs are. Make a short list of your top 1-3 needs and goals from this financial move.

Preserving Financial Gains

The average Tacoma home has more than doubled in value since 2012. Zillow reports that the average home value rose by more than 14% in 2020 alone, or almost $76,000.

While real estate prices seem to have proven to consistently go up over the long term, there is no guarantee how they will fluctuate in the short and medium term. So, while you may feel rich on paper right now, some will wince with agony if those gains temporarily vanish. 

For many, withdrawing and securing a good chunk of this equity in cash may be a wise move that keeps your finances strong. 

Reducing Overall Monthly Payments

Refinancing your property in Tacoma may also be a financial tool for lowering your total monthly payments and expenses. 

Reducing Real Housing Costs

Now that you may have built up some equity in your home, you may be able to refinance your mortgage loan or combine loans and reduce your interest, and/or the term of your loan to dramatically reduce the total amount you will pay for this property. It can make the difference of tens and hundreds of thousands of dollars over the life of your loan. 

Access To Cash 

Other Tacoma homeowners will want to refinance to get their hands on cash to restock their emergency fund, to fund other critical purchases or investments, or to weather unexpected medical bills or income losses.

Have an idea of how much cash or savings is going to make refinancing worth it for you.

2. Know Your Current Financial Situation

Tacoma mortgage lenders aren’t going to be able to give you much solid information or a reliable quote unless they know what they are working with. The more accurate the information you provide them, the more accurate their loan quote and pre-approval will be.

Consider all of the things which make up a home loan application and where you stand.

This includes:

  • Your credit score and payment history
  • Current balance on any mortgages or debts on this property
  • Your debt to income ratio
  • Your verifiable income
  • How much you have in liquid assets in the bank

How much your home is worth and the amount of home equity you have will play a big role in refinancing terms too. 

Gather as much of this information as you can so that you are prepared to sail through the loan application and refinancing process.

3. Learn About Your Mortgage Options

Educate yourself on your mortgage options. Know the different types of loan programs, features and types of refinances you can choose from. Ask your mortgage broker for a side by side comparison so that you can see the differences.

Loan Terms

You’ll often have the choice between a fixed rate or adjustable rate mortgage loan, and the number of years you want your loan to be. 

Loan Programs

Some types of loan programs like FHA and VA provide streamlined refinance options which may not even require an appraisal. 

Types Of Refinance

There are three main types of refinance:

  • Rate and term refinance
  • Cash out refinance
  • Limited cash out refinance

A rate and term refinance means you are just refinancing to adjust the interest rate and/or length of your loan. For example, reducing your rate by 2% and going from a 30 to 15 year loan. 

A cash out refinance puts a lump sum of cash in your account and refinances your rate and term. 

A limited cash out refinance means you are typically limited to 2% or $2,000 in cash out, but you can increase your loan size to directly pay off and consolidate other debts, such as credit cards, car loans, etc. The interest rate on these loans is typically better than if you are just taking out all of your cash. 

4. Find The Best Tacoma Mortgage Broker

Ask for referrals and recommendations, check out online reviews, and interview the best local mortgage brokers to find a good fit for you. A mortgage broker will be able to show you all of the available loan programs out there and help you compare them.

5. Apply For Your Loan Refinance

Make your loan application online, over the phone, or in person.

6. Return Any Underwriting Conditions

After you receive your loan commitment, return any outstanding loan conditions for underwriting as quickly as possible. This usually covers items like recent mortgage statements, bank statements, W2s, paystubs, etc. 

7. Close Your Loan

Close your loan by taking the paperwork to a local notary and mailing it back in, attend a physical closing at the title company or attorney’s office, or close virtually online. 

About the author 

Joe Tafolla

Helping Pacific Northwesterners buy their dream homes for over 15 years. Founder of Tacoma Mortgage Brokers and Seattle's Mortgage Broker and author of Homeownership Simplified: The Truth about ZERO Down.

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